Why Smart Automakers Will Hold Off on EVs and Autonomy, For Now

It’s a wonder Henry Ford didn’t wind up destroying the company that bore his name. While researching my recent article on the people's V8, I encountered an entire flock of anecdotes about how America’s most iconic industrialist alternately sabotaged and crippled his own efforts, usually through stubbornness or simple ignorance. His grandson, Henry Ford II, is widely regarded as having saved the firm from the old man’s eccentricity. Yet when "The Deuce" took Ford Motor Company public in 1966, he would expose it to a group of people whose short-sightedness and willful stupidity made his grandfather look like a piker by contrast: the American investor.

The last 50 years of Ford’s existence have been spent in abject subservience to an increasingly myopic market, one that values companies with the same hyperactive, distracted unpredictability of my friends and I trading Topps baseball cards in 1988. Right now that market is obsessed with the technology sector, which means Ford needs to act like a tech company in order to keep the market happy. That, in turn, requires public and frequent genuflection at the altars of "mobility," "sustainability," and other buzzwords that have no tangible or measurable meaning at the moment.

Right now, Ford’s deep knee bends aren’t cutting the mustard with the stock-picker crowd. Investors are far more impressed with hip money-losers like Snapchat or Tumblr than they are with, say, a company that builds nearly one million hugely profitable pickup trucks every year. It’s not enough for Ford to have superiority in the majority of meaningful American market segments, nor it is enough for the logo that once adorned the country’s cheapest cars to be a genuine aspirational marque. Wall Street wants the company to go play with electric toys.

Allow me to make a proposal: Ford should immediately, and with prejudice, discontinue every one of its efforts in the fields of autonomous cars, electric cars, "mobility," and every other buzzword-bingo money pit that's currently absorbing the golden eggs laid by the F-150. In doing so, the firm will both triumph in the short term and ensure its ability to compete in the automobile market’s next form, whatever that may be.

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The reasons are obvious to anybody who reads old car magazines. Or old computer magazines. The tech race is rarely to the swift. If you think I’m wrong, I’d encourage you to fire up your Xerox Star, head on over to Friendster, and send me a Diffie-Hellman public key so I can read your RFC561-formatted e-mail on my CP/M-operating-system, Motorola-processor, 32-bit computer that also runs Sybase to keep track of my 8-track collection.

History shows us the most successful tech companies, typically, deliver the lowest-cost or most convenient solutions for a recognized standard or format. Being first to market simply doesn’t matter in the long run. That’s why you’re most likely reading this on an "IBM compatible" computer that wasn't made by IBM.

The problem is, auto companies don’t really understand this. They all expect to make some kind of killer breakthrough in electric or autonomous vehicles that will give them a Model T’s worth of disruption. In reality, they’d be lucky to get a Chrysler minivan’s worth of disruption out of the effort, not least because they’ve mostly subbed the effort to Asian companies that will take a remarkably egalitarian approach to their intellectual property the minute that

a) it’s profitable for them to do so;

b) the Chinese government decides its need for the tech supersedes IP law.

Any battery or powertrain technology sufficiently advanced to raise a real ruckus will quickly become universal. So why spend billions in pursuit of the Holy Grail when you can license it for pennies the minute it appears?

Don’t forget that the private-vehicle market moves at a snail's pace. The average car on American roads is 11 years old now. The average smartphone doesn’t live to be two and a half. Let’s say, just for the sake of discussion, that GM brings out a perfected electric car in the year 2025 and Ford doesn’t match it until 2027. Does any sane person think that lag time will sink Ford, in a business where only one-fifth of the market will go new-car shopping during that time? Put another way, how long did Toyota allow the Accord to exist unopposed? (Answer: five years.) What difference did it make in the long run?

Ford GoBike, an urban mobility initiative.

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If I ran Ford, I’d take out ads saying, "We will sell no electric car before its time." Then I’d sit back and let everybody else exhaust their bank accounts and customer goodwill on vehicles that don’t meet expectations. What good would come from being first to market? Does Ford suffer a single dollar of lost profit from not having an effective competitor to the Chevy Volt? You know the answer to that.

Then I would de-allocate the $15 billion—enough to buy a Big Mac and fries for every human being on the planet—that Ford has earmarked for fantasy-farm projects between now and 2023. I would sit my engineers down and ask them: What breakthroughs could we make in conventional vehicles using that money? I have one idea, which I stole from a chat with a few friends who work in the business: carbon-fiber pickup trucks.

I know, I know, Ford just got done with its moonshot aluminum-truck project. Well, why not kick the competition while they’re down? Let’s pull another half a ton out of half-ton trucks. How feasible is that? Consider than in 1982, it wasn’t uncommon for decent road bicycles to weigh 30 pounds. Today, 15 pounds is easy to achieve, and 13 pounds is possible if you’re willing to spend. Would a moonshot carbon-fiber program achieve results like that? I can’t say. However, I guarantee that there would be some positive results, compared to the big fat zero results that Ford is going to get from whatever mobility-as-a-service-buffoonery it's currently contemplating.

Alternately, Ford could do something brilliant, destructive and effective with the money: it could simply over-equip today’s existing trucks. Starting tomorrow, a top-spec F-150 King Ranch could wear the same MSRP as a mid-range Chevrolet Silverado LT. Take a whole generation of half-ton trucks and sell them at the same narrow margins the automakers earn on sedans. Boost volume from 900,000 to, say, 1.3 million trucks a year. Stab the competition directly in the heart of their profits.

Any of these ideas would give Ford a leg up on its enemies both foreign and domestic, ideally positioning it to take advantage of someone else's electric breakthrough. All of them are better than frittering away a fortune chasing imaginary breakthroughs. But if you insist—if you absolutely demand—that Ford use its money on electric sustainable mobility services, then I have one more killer app for you, my friend.

It’s simple. Put that $15 billion in a bank account. The minute someone else cracks the electric-car code, take that money and use it to build a new River Rouge—a complete standalone factory, where raw materials go in one end, and completed cars come out the other. Use that factory to build what software folks call a minimum viable product. Make the cheapest, most basic, most simple and serviceable electric cars possible. Flood the market with them. Instead of changing it in the second or third model year, make it even cheaper.

Does that sound familiar?

1908 Ford Model T

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Henry Ford didn’t invent a single technology used in the Model T. The only substantial patent involved was for the magneto ignition; the planetary transmission had plenty of prior art. And, of course, the assembly line itself was someone else’s idea. What made the Model T successful was its incorporation of several forms of existing leading-edge tech into a vehicle that working families could feasibly afford. It’s a strategy that Ford would do well to remember, and possibly emulate, in the hard years ahead. And it wouldn’t require a single penny spent right now.

Which brings me to a final note regarding Henry Ford. He once said, "The highest use of capital is not to make more money, but to make money do more for the betterment of life." It’s something that our investor class would do well to remember. Perhaps they can stop worrying about who will be the first car company to go electric, and worry instead about who will use that technology to help the most people. Henry Ford was wrong about a lot of things, but on this subject I believe him to be absolutely, utterly, ahead of his time, and ours.

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